Why smart software to gauge employee satisfaction is seen as a vital component in Madison Reed’s corporate mission

Want market disruption? Make sure you really know what your team is thinking

Ask Amy Errett, CEO and co-founder of five year old-San Francisco based Madison Reed why she feels she needs software to measure her employee’s engagement with what she’s trying to do, and the answer comes back pretty quick:

The best way I could describe it as the way to find your own internal Net Promoter Score.

Which makes a lot of sense if you realise that she sees her mission, like 99% of Silicon Valley contenders, as to disrupt a market using technology - in her company’s case, the US hair colour industry - that answer starts making a lot of sense.

Because of course - and why would one be surprised - there are incumbent consumer packaged good companies already providing solutions in this market, recording 3.1% growth to reach $12.7 billion, according to 2017 Euromonitor International analysis. Madison Reed’s value proposition is that it has listened to consumer fears about harmful chemicals, had made ordering online as easy as possible, and is using algorithms to colour match the shopper to what they really want and which quickly serves up three swatches that it is confident the user could use and have a great outcome.

Madison Reed isn’t just a clicks-only company, however; while it does ship boxes direct, it also has its our own physical locations where Errett says she is also disrupting the salon-side of the hair colouring equation - six Madison Reed ‘colour bar retail locations are now open in both Northern California and New York City, with 14 more set to open in 2019. (It also has a strong partnership with ULTAm she told diginomica.)

With 180 people, the company is clearly on a growth path, but is not yet at scale where it needs to worry about HR needs at scale, though. So why should it invest in employee engagement technology - in this case from Glint, which became part of LinkedIn in October? It turns out that the relationship goes back a long way - Errett believes she may have been as soon as the first or second paying customer, when in very early start-up mode, a decision she says she made because of existing commitment to using the best methods available to track employee buy-in:

I am a believer of employee engagement, and we use this technology to get a deeper understanding of where we need to improve, where there's deep satisfaction, where there's passivity, and so on.

Traditionally, doing that would have been by big annual employee surveys, usually around the six month mark, and in her past life - Madison Reed is the fourth company she has run - Errett did indeed use just such an approach.

But not this time, she says:

One of the most important factors in success in any company is having a very strong culture - where the temperature of what employees think or do and how they are bought into the mission of the company and our values is critical.

We believe deeply in that; we believe that our values define us, and that defines our customer experience as well. I am a massive zealot for great employee engagement technology, and I picked this solution vert early on because of the depth of its features, the anonymous nature of the responses and how we could tailor some of the topics and questions specifically to our unique business.

Being able to derive bespoke answers to management questions was a driver from the start, she points out, as the company was always designed to have a very rich mix of team members - headquarters, which is a marketing, development engineering, product development, physical product R&D, and finance cohort, and a significant number of hourly employees in its contact centre and at the physical retail sharp end:

It's been very important to be able to measure that spectrum, because the motivations of those people and their job responsibilities are very different from each other. And as we are a modern venture-backed technology-enabled company, for us to use a legacy system would make no sense.

Staff - resource or commodity?

In practical terms, though, what does having a modern employee engagement system do for a CEO like Errett? Apart from simplicity - you can answer any HR questionnaire on your cell and be done in two minutes - it seems the concept of ‘pulses’ is where value really starts to accrue.

Specifically, a pulse is a monthly way of getting a health check on just what the team is really thinking (hence the medical metaphor, presumably). This enables Madison Reed’s executive team to take immediate action to address issues in claimed “near real time”, while the ability to view engagement statistics by department also helps he company uncover specific issues quickly:

Because you're pulsing on a regular basis with deep ability to get to the real underlying data and understanding of what people are saying and why and how, you have the ability to get higher engagement. I also really like the way you can baseline yourself with similar sized companies to see how you're doing to see how you're doing against yourself.

We asked for examples of how the technology had helped in a real-life scenario was around what team members saw as inconsistent application of attitudes to home-working, she states:

Some managers were lenient about it, some managers were stringent about it. The company hadn't taken its stand on it: what was typical for the rest of Silicon Valley. What was fair? Our customer service people often work remotely as well, so they get to do it. What about headquarters people?

It became a really important factor that kept coming up that we hadn't addressed yet, which we did with the system; we came up with a standard procedure that has worked really well and which I think has given people the kinds of freedom they want within a set of guidelines.

What it does is if you're paying attention to it, employee engagement tells you everything that's going on, and then helps you effectively prioritise the things that are most important, and then gives you an opportunity to really make some real change.

She adds:

My guess is that the old surveys could have done something similar - but if you're sitting there filling out 80 questions which you dread doing it and it's only once a year anyway, it doesn't have any teeth. But what the system won’t do for you is the next step - which is, do you have the courage to hear what people think? Do you have the courage to give people the opportunity to effectively help change?

If I don't pay attention to the fact that people don't think that their managers are listening to them, talking to them, there's career development, training, investment - real things in the competitive work environment. You're either going to look at your team members in your organisation as an asset that you need to protect, develop, grow, and have flourish, or you can look at those team members and be like, oh, they’re commodity.